Correlation Between Ironbark Capital and Itech Minerals

Can any of the company-specific risk be diversified away by investing in both Ironbark Capital and Itech Minerals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ironbark Capital and Itech Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ironbark Capital and Itech Minerals, you can compare the effects of market volatilities on Ironbark Capital and Itech Minerals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ironbark Capital with a short position of Itech Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ironbark Capital and Itech Minerals.

Diversification Opportunities for Ironbark Capital and Itech Minerals

0.47

Correlation Coefficient

Ironbark Capital  Itech Minerals

Very weak diversification

The 3 months correlation between Ironbark and Itech is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ironbark Capital and Itech Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itech Minerals and Ironbark Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ironbark Capital are associated (or correlated) with Itech Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itech Minerals has no effect on the direction of Ironbark Capital i.e., Ironbark Capital and Itech Minerals go up and down completely randomly.

Pair Corralation between Ironbark Capital and Itech Minerals

Assuming the 90 days trading horizon Ironbark Capital is expected to generate 0.2 times more return on investment than Itech Minerals. However, Ironbark Capital is 5.08 times less risky than Itech Minerals. It trades about -0.04 of its potential returns per unit of risk. Itech Minerals is currently generating about -0.03 per unit of risk. If you would invest  45.00  in Ironbark Capital on December 22, 2024 and sell it today you would lose (1.00) from holding Ironbark Capital or give up 2.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ironbark Capital  vs.  Itech Minerals

Ironbark Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ironbark Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Ironbark Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Itech Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Itech Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ironbark Capital and Itech Minerals

The main advantage of trading using opposite Ironbark Capital and Itech Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ironbark Capital position performs unexpectedly, Itech Minerals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Itech Minerals will offset losses from the drop in Itech Minerals' long position.

The idea behind Ironbark Capital and Itech Minerals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.